Fraser Institute News Release: Rate of small business startups in Canada down nearly 50 per cent in 30 years

(May 17, 2018)

VANCOUVER, British Columbia, May 17, 2018 (GLOBE NEWSWIRE) -- The growth rate of small business startups in Canada—a key measure of entrepreneurial activity—is on the decline due, in part, to the country’s aging population, finds a new book released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

The book, a collection of essays authored by leading scholars in Canada, the United States and Europe, spotlights declining entrepreneurship across the developed world and what can be done to stem the adverse effects of demographics on entrepreneurship.

Specifically, in Canada, small business startups—as a percentage of all small businesses—fell sharply from 24.5 per cent in 1984 to 12.8 per cent in 2014, a decline of almost 50 per cent.

One of the reasons for this decline is an aging population.

Crucially, the percentage of Canada’s population between 25 and 49 years old—the prime age for entrepreneurialism, according to research—hit its peak at 40.1 per cent in 1995. By 2015, that percentage had fallen to 33.7, and by 2065, it’s expected to drop further to 29.3.

While governments can do little to stem the tide of demographics, they can improve the incentives for possible entrepreneurs and improve the environment within which entrepreneurs operate. For example, reducing personal and business income tax rates and eliminating the capital gains tax would promote and encourage greater entrepreneurial activity. And removing or reforming certain regulations could make it easier to start and grow a business.

“In light of the greying of our citizenry, it’s incumbent on policymakers to create better incentives for entrepreneurial risk-taking to spur innovation, technological advancement and ultimately create more opportunities and prosperity for all,” Globerman said.

The book is a collaboration between Canada’s Fraser Institute, the Center for Strategic and International Studies (CSIS) in the U.S., the Adam Smith Institute’s The Entrepreneurs Network in Britain and the Institute of Public Affairs in Australia.

The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org